More than half of companies in the South West have been impacted by the political and economic instability in the last quarter, a new report by chamber of commerce Business West has found.
The survey, which questioned 350 leaders from across the region, said three-quarters of companies were worried about the general economic conditions, while 63% of firms said business uncertainty was a "key concern". The figures have jumped by more than 20 percentage points since this time last year, during the depths of the pandemic.
The proportion of businesses concerned by taxation has risen to 38% - from 22% in the third quarter - while confidence in the UK economy reached a new historic low. Only 6% of companies feel confident in the UK's economic prospects, Business West said.
Although 46% of companies in the region are optimistic about their own prospects, the figure has decreased by almost 20% since this time last year. The gap between confidence in personal business prospects and that of the economy is the highest ever recorded.
Rebecca Hobbs, owner of Bijoux Floral Design, which is based in Yate in South Gloucestershire, said: “I have over 50 bookings for next year already, however I am expecting customers to decrease their orders due to the cost of living and recession. This means I'm going to have to take on more work just to stay afloat.
“On top of that I am probably going to have to register for VAT. I won't be earning any more money but due to the cost of raw materials going through the roof I’ll need to charge more meaning I will hit the VAT threshold sooner. I am concerned about the next year, but I have thought about contingency plans if necessary.”
Inflation is continuing to put pressure on firms in the region, too. More than half of companies questioned in the survey have hiked their prices in the last three months as they are faced with rising costs, while half are expecting to put their prices up in the next quarter.
The number of businesses reporting difficulties with hiring also remains high at 79%, while workforce expansion is low. Only 18% of respondents confirmed increases in staff over the period and just a fifth are expecting to recruit during the next three months.
Judith Barrass, director of Ebonstone, a consultancy in Chippenham in Wiltshire, said: “It's been challenging. We're concerned over staff costs and ability to retain and recruit staff.”
UK sales and orders have also fallen further into negative territory in the fourth quarter, which Business West said was symptomatic of the impacts of the recession. The proportion reporting a decrease in domestic sales is now above 30%, compared to 17% this time last year.
Matt Griffith, director of policy at Business West, added: “2022 has been a very tough year for local businesses, with global inflation and economic headwinds compounded by a confidence sapping period of political uncertainty in the UK. The consequences are still being felt, both on business balance sheets and economic sentiment. We hope that 2023 holds more cheer."
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